Stocks rise as inflation fears ease
New York ? Investors cheered by long-awaited good news on inflation pushed stocks higher Tuesday, hoping that a lower-than-expected increase in basic wholesale prices meant the economy would stay on a sound footing. Solid first-quarter earnings also fueled buying.
Wall Street had feared that the Labor Department’s Producer Price Index, which measures wholesale prices, would show inflation taking hold in the economy. But while the PPI rose 0.7 percent for March due to higher energy and food prices, the closely watched “core” PPI grew just 0.1 percent, less than the 0.2 percent economists expected.
“We’re finally seeing some numbers that point to less inflation in the pipeline,” said Lincoln Anderson, chief investment officer at LPL Financial Services in Boston. “Coupled with a pretty strong earnings outlook for the quarter, this hopefully puts a floor on the market and gets things turned around again. The fundamentals of the economy remain good.”
The Dow Jones industrial average rose 56.16, or 0.56 percent, to 10,127.41, coming off of four straight down sessions and a loss of 436 points.
Broader stock indicators also gained ground. The Standard & Poor’s 500 index was up 6.80, or 0.59 percent, at 1,152.78, and the Nasdaq composite index gained 19.44, or 1.02 percent, to 1,932.36.
Worries about U.S. oil refining capacity pushed crude futures sharply higher, keeping stock gains somewhat in check. A barrel of light crude settled at $52.29, up $1.92, on the New York Mercantile Exchange.
The lack of a major selloff as crude futures climbed nearly $2 per barrel showed that Wall Street may no longer be concerned about the inflationary effects of oil. And analysts said the PPI report may be showing a clear end to the market’s inflation worries — as long as today’s Consumer Price Index, measuring retail prices, also comes in better than expected.